Bajaj Finance has been one of the top stock performers in India this year, defying drops in peers amid a crisis of bad loans and defaults that has hobbled India’s non-banking financial companies.

The shadow banks shares have surged 25 per cent while some rivals have plunged as much as 89 per cent since August 2018. That was the month IL&FS Financial Services missed a payment on short-term borrowings, triggering a cash crunch and a crisis of confidence in its fellow lenders.

Also read: Huge wall of maturing debt looms for NBFCs

Bajaj Finances stock gains have accelerated more recently, with its 36 per cent advance so far this year topping the benchmark Sensex index. The company has been helped by its strategy of diversifying into lending to the consumer durables sector as well as rural and medium-sized businesses. This has limited the company’s exposure to housing finance loans, and kept its bad loan ratio at 1.5 per cent versus 8.8 per cent at Shriram Transport Finance Co. and 9.7 per cent at Mahindra Rural Housing Finance Ltd.

Read more: NBFC crisis to pull down home loan growth first time in three years

They have done a good job of diversifying their business beyond housing finance, unlike other NBFCs, said Deepak Kumar, an analyst at Narnolia Securities Ltd. Also, their asset-light operating model by working with dealers has helped the company bring down its operating expenses.

The shadow banking crisis began due to an asset-liability mismatch, which transformed into a problem of mistrust after IL&FS was downgraded from its former triple A rating. Bond buyers shunned non-banking lenders with large exposure to housing finance loans leading to a credit crunch.

Well-run NBFCs with parentage and vintage never saw a funding crunch, Subramanian Iyer, an analyst at Morgan Stanley, said in a video address. They grew their borrowing, at a higher cost though. The funding market has been clearly demarcating them from the rest.